What Obama is Getting Wrong About Economic Recovery

This past week, President Obama announced the outlines of a new jobs plan for the country. For the first time, Obama suggested that up to $200 billion from the much-hated “bailout of Wall Street” program should go toward jobs creation ideas.

Liberals are generally praising President Obama’s recent jobs speech for finally shifting relief away from Wall Street and over to Main Street, where most of us live. Supporters like the new emphasis on small business, rather than big banks and mega-companies that want to hire new workers about as much as they want the Swine Flu. Conservatives, who have been whining for job creation and tax breaks for small business predictably contradict themselves, decrying Obama’s call for job creation and tax breaks for small business.

We recognize as a step in the right direction, Obama’s call for the use of recouped bank bailout funds for community-bank lending to spur hiring in small businesses and for increased fiscal relief to states and localities, and more money to shore up critical safety net programs like Unemployment Insurance and the COBRA health coverage for unemployed workers. We, like many Americans, feel that it is only fair that our taxpayer dollars, previously used for big-bank bailouts, now be used to help our families and communities. However, we think Obama has left out key components as he outlines his plan and is missing a crucial opportunity to lead us in the direction of a sustainable and equitable recovery for all Americans.

Specfically, we feel Obama has made a mistake by ignoring the direct creation of public sector jobs and by not specifying mechanisms to ensure a targeting of jobs to populations most in need of them.

The private sector is still more than squeamish about hiring and although incentives to small businesses will help, without the creation of a big public jobs program, it is hard to see how we will return to levels of employment that will sustain growth in this economy. Franklin Roosevelt had it right with programs like his Works Progress Administration. Even Nixon directly attacked high unemployment with his Comprehensive Employment and Training Act (CETA). Obama needs to take heed. Let’s expand programs like AmeriCorps, let’s create a new public jobs programs like a Green Jobs initiative. We need good, community-based public jobs for a vital recovery.

President Obama, Congress and we, the people, must recognize that this current “Great Recession” is a crisis that provides an opportunity. If we are smart, we will tackle double-digit unemployment in a way that addresses our nation’s deeper problem of profound inequality and lack of sufficient protections from growing poverty.

Although the unemployment rate overall is staggering at 10%, disenfranchised minorities like African Americans and Native Americans regularly have an unemployment rate twice that of White Americans. Blacks and Latinos each make up about 18% of the unemployed, this requires that at least 40% of new jobs employ Blacks and Latinos if the nation hopes to mend its racial economic divide. Young people are experiencing record high levels of unemployment, over 25% for 18 and 19 year-olds and close to an unimaginable 50% for Black teens. A bold jobs program that will place millions of the unemployed of all races on a payroll is necessary. Supports like childcare, job training andEnglish as a second language (ESL) classes must be part of the package. And mechanisms should be included that will ensure well paying jobs will be targeted to populations with the highest unemployment.

A40 billion Public Jobs program. A massive federal jobs program to create at least one million jobs and put both recently – and long-term unemployed workers back to work in jobs that provide benefits, and create stronger, more vibrant communities across the United States. With 71% favorability toward government funded public jobs this is a strongly supported government measure.

$270 billlion to relieve state, local, and tribal governments. Fiscal relief will help to stabilize and restore current job losses and furloughs, while at the same time maintaining vital public services and programs many of which are needed now more than ever.

$97 billion for Unemployment Insurance, COBRA benefits, Temporary Assistance to Needy Families (TANF), and Food Stamps. These programs will help millions of Americans to get through this rough economy and are some of the most efficient means to stimulate spending in the economy.

Most Americans are still angry that the Wall Street firms that created the crisis are not paying their fair share. Using “bailout” funds to create jobs makes enormous sense, and there are other ways to have Wall Street pay its fair share of the economic recovery. For example, a number of economists have now backed a small tax on speculation on Wall Street. Known as a “transaction tax,” this progressive tax could raise $150 billion for help with jobs and recovery.

We also propose such measures as ending overseas tax havens and eliminating tax preferences for capital gains and dividends. This added revenue will provide for the investment that America so desperately needs and the extra $200 billion in bank- bailout funds can be used to pay down the debt.

Dr. King stated over 40 years ago: It is not for a lack of resources that the nation faces such great inequality but a lack of will. A bold jobs program and social investment are required to show that the Obama administration has the will to address the socio-economic challenges facing this country.

Dedrick Muhammad is a Senior Organizer and Research Associate at the Institute for Policy Studies. Karen Dolan is a fellow at the Institute for Policy Studies and Director of the Cities for Peace and Cities for Progress projects there. She specializes in domestic economic inequality issues.